Due to the work-from-home movement and new migration patterns, rent prices for both single-family and multifamily properties soared during the first years of the pandemic.
Currently, due to a variety of factors, some rents are skyrocketing while others are being left in the cold.
Multifamily rents fell 0.8% in April compared to the same month a year ago, according to Apartment List, as a large amount of new supply entered the market and more is in the pipeline, leading to weak rents.
Apartment rents have certainly increased for three consecutive months, but the growth rate is very small at 0.5%. Rents typically start rising in the spring, but this year’s increase is not only smaller than usual, but also smaller than the previous month. The national median rent in April was $1,396.
According to the Apartment List report, “This is typically a time when rent growth accelerates in preparation for the busy moving season, so the fact that growth has slowed this month is a sign that the market is headed for another moderate summer.” “There is a possibility that it is.”
Apartment vacancy rates are also rising, reaching 6.7% as of March, the highest level since August 2020. Although building permits for new apartment buildings have slowed, the number of units currently under construction is near an all-time high, and last year saw the most new apartments hit the market in more than 30 years.
Single-family home rents fared even better, rising 3.4% in March compared to the same month last year, according to a new report from CoreLogic. But that annual increase continues to shrink as more supply enters the market from rental home builders.
About 18,000 single-family homes were started in the first quarter, a 20% increase compared to the first quarter of 2023, according to an analysis of census data by the National Association of Home Builders. In the past four quarters, the construction of such housing reached 80,000 units, an increase of nearly 16% compared to the previous four quarters.
“Although U.S. single-family rental growth strengthened across the board in March, the latest numbers also reveal some weaknesses,” said Molly Borsell, chief economist at CoreLogic. “Overbuilt areas such as Austin, Texas, continued to soften, with annualized declines of 3.5% in March.”
Borsell said the overall strength in single-family home rents means potential home buyers who are out of the home purchase market are choosing to rent similar alternatives. It is said that it shows that there is. With mortgage rates back in the 7% range and house prices continuing to rise, buying a home is becoming increasingly unaffordable.
Of the 20 largest U.S. cities, Seattle had the highest year-over-year increase in single-family rents at 6.3%. New York followed with 5.3% and Boston with 5.2%. The decline was led by Austin, Texas, with a 3.5% decline, Miami, with a 3.2% decline, and New Orleans, with a 1.4% decline.
But for the first time in 14 years, rents for single-family attached properties, or townhomes, decreased year-over-year.
“The decline in the attached segment is being driven primarily by some markets in Florida, including Austin and New Orleans. Some markets are seeing increased rental supply as multi-family housing is being completed, and single-family apartments It competes with ancillary segments of the “family rental market,” Boesel added.
